Government Disaster Relief – A Recipe for Disaster

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November 6, 2012 by Anders Ingemarson

A week after she came ashore, Sandy’s impact is still being acutely felt up and down the Eastern seaboard. Homes and businesses are still without power, lines are long at the pump, grocery store shelves are empty and getting to and from work and school is a major undertaking in many places.

Public officials from the president to governors to main city and small town mayors have faced the challenge head on and taken decisive action; a prime example of government involvement at its best, something to be proud of. Or is it? Is it truly the government’s role to be in the disaster relief business? Is it right to tax Mae in Memphis to provide relief to Andy in Atlantic City? Does Brooklyn Bob’s predicament give him a claim check on Will in Wichita? No. The only proper role of government in times of disasters is the same limited role as in normal times: to protect our individual rights and our property; to maintain law and order. Perhaps a heightened alert is temporarily needed to prevent looting and similar lowly activities, but that’s it. In all other matters we should have total separation of government and disaster relief.

Let’s look at how this would play out in practice. Short term, imagine as of tomorrow morning a five year plan being put in place to eliminate FEMA, federal flood insurance, all other federal, and all state and local government disaster relief programs. What would happen? Insurance companies would get busy incorporating new risk scenarios in their product offerings to those of us who previously could have counted on some kind of disaster relief or another. We would see a plethora of private disaster relief companies emerge, many no doubt run by and staffed with competent individuals previously working for the government. They would contract with the insurance companies to provide assistance when disaster strikes. Businesses, which already have risk management plans for disaster situations would further augment those plans. And private individuals would associate voluntarily at the local level to put disaster plans in place. In short, life would go on but without the force of government violating individual rights in the name of need.

Long term, with total separation of government and the economy, the general progress unleashed by reducing taxes and regulation would lessen the impact of disasters altogether. For instance, utility companies free of regulation would find ways of reducing our dependence on the infamous grid by developing local energy solutions. I suspect a resurgence of nuclear power. And absent federal and state environmental regulations, gasoline would be abundant even during the worst disasters as supplies would easily be rushed from neighboring areas. And in a not too distant future, we’ll be zooming around in our private flying machines like the Jetsons, drastically reducing our dependence on roads and the damage disasters often do to them. Outlandish? Well, much of the technology is already available, but current aviation regulation is a pretty effective barrier to progress.

Rerouting hurricanes and suppressing earthquakes may still be science fiction but protecting individual rights and separating state and the economy isn’t. Government disaster relief is fundamentally no different from any other government program. It’s a recipe for disaster.

One thought on “Government Disaster Relief – A Recipe for Disaster

  1. Michael Rivers, CFA says:

    Freer insurance markets (i.e. thorough-bred horses, collector cars/motorcycles) already show how much more effective insurance pricing and claims can be. Federal flood insurance just goes to show how screwed up markets become when the government gets involved.

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